Apologies are a key customer service tool for managing customer relationships. We run a field experiment with a retail technology company where customers who have a bad experience are offered an email apology and monetary compensation. We vary the wording of the apology and the size of compensation in order to test predictions of the apology model from Ho (2012). In particular, we are looking for the impact of an apology on the shape of future demand. Specifically, we want to know how apologies affect customer response to future price increases and decreases and to future bad experiences.

The Intervention consists of identifying customers who have had a bad experience. After the bad experience, customers in the treatment group will receive an email an apology whose wording reflects either a generic apology, a reputation based apology, or a promise based apology (Ho, 2012). Each treatment group will be offered either $0 or $5 as compensation.

Intervention Start Date

2017-07-21

Intervention End Date

2017-09-30

Primary Outcomes

Primary Outcomes (end points)

Primary outcomes are estimates of future demand as a function of the apology treatment (e.g. responsiveness of demand to future price changes, future circumstances, and future bad experiences as well the level of future demand).

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)

Secondary Outcomes (explanation)

Experimental Design

Experimental Design

Customers who have a bad experience are randomized into one of the three apology conditions (generic apology, reputational apology, promise apology), and one of the two compensation conditions plus a no apology control. Within each of the apology conditions, subjects are randomized between receive $0 in compensation and $5 in compensation.